1/4/2017

Outsourcing Pros and Cons: How to Scale Your CompanyWithout Hiring

process.st/outsourcing-pros-and-cons/

Ben Mulholland

January 4, 2017

Outsourcing is nothing new. Manufacturing, support, accounting, marketing, and more have all been outsourced fordecades to save time and money (although modern outsourcing only really started with IBM).

After all, why bring on an accountant full time when you can outsource your taxes once a year?

Outsourced services have doubled in value since 2000, and with benefits like saving time and money.

Weighing the outsourcing pros and cons, however, shows that it isn’t some magic pill which will make difficult workdisappear.

Not only that, but everyone has a different opinion of the types of outsourcing – how the hell do we weigh the prosand cons when nobody agrees on what it even is?

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So, to make things easy, we here at Process Street have summed up the advantages and disadvantages ofoutsourcing vs insourcing, and (if the former) tips on some different kinds of outsourcing you can use.

It’s time to outsource the work you don’t need to do and focus on getting done what really matters.

Should you outsource your work?

The question of whether to insource or outsource a task is actually pretty simple – it comes down to 4 keyquestions.

Do you have the required experience / resources?

Do you have the time to do it?

Do you have to do it?

Is there a security risk?

None of these are deal breakers, but you need to consider each answer to know whether you should be outsourcingor not.

Do you have the required experience / resources?

One of the biggest advantages of business process outsourcing (and outsourcing in general) is being able to useknowledge and resources outside of your own workforce.

So, rather than having to hire a full-time team member or rent a facility to manufacture a product, you can justoutsource the tasks as and when you need to.

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If you’re faced with a task which your full-time team does not have the experience, knowledge, and/or resources tocomplete, then you need to ask how often the task will come up.

An important recurring task that you can’t do in-house might warrant bringing in a new team member or training anexisting one. A one-off task is usually better to hand off.

Having said that, guess which is the quicker (and less expensive in the short-term) solution.

Do you have the time to do it?

If your team is already chock-a-block with tasks for the next three months, chances are that you won’t have time tocomplete yet another item on the pile.

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However, the most important thing to remember when asking if you have time to do a task is that these can betasks you’re already doing.

For example, if your team is struggling to juggle their workload, and there is one thing in particular which requiresmore time than thought, that’s your prime candidate to outsource.

This isn’t just about having time for new tasks, it’s about whether your time can be better spent doing other things.This leads us to the next question…

Do you have to do it?

Some of the best (and most common) tasks to outsource are ones which require little unique input from someone inyour company/culture.

Need to generate your company’s invoices or handle your bookkeeping? Someone else can do that.

Manufacturing is also common to outsource due to the impersonal nature of the task, along with lower real estateand employee costs overseas.

There’s a reason we’re all familiar with cheap toys emblazoned with “Made in China”. It’s pure insanity to build yourown factory line – the manufacturing is outsourced because you don’t need to do it.

As with the previous question, this should include tasks you enjoy doing. For example, you can love writing blogposts all day, but you could have someone else write your content

Is there a security risk?

The final factor when considering outsourcing pros and cons is the security risk attached to the task.

It’s not a deal breaker if the task contains sensitive information, but you should be aware of the risk and (if there is arisk) take appropriate measures when considering who to outsource to.

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For example, payroll and tax preparation is commonly outsourced despite containing sensitive information – it’s farquicker to pay a professional to do it, and as long as the party you employ has a proven track record you can keepthe risk to a minimum.

Most outsourcing companies know about the security risks that come with the territory, and so will also give theirsecurity policy on their website. Bench is a good example of this.

Non-disclosure agreements are also great to make doubly sure that all sensitive information will be treated as such.

Outsourcing pros and cons

So, you’ve identified whether or not a task can be outsourced, but that doesn’t mean it always should be.

Much like the initial question of insourcing or outsourcing, there are a couple of key factors which can make thedecision for you. For example, if the talent or resources you need aren’t available locally or at a price you can affordto purchase, then, of course, you’re going to have to go further afield.

As for everything else, however, it all comes down to weighing up the following pros and cons.

Outsourcing pros

There are eight main benefits to outsourcing:

You draw from a larger talent pool

Lower costs

It forces business centralization

Ready access to more specialized workers5/14

Lets you access better technology

They work when you can’t

It frees up your time

Allows scaling through reduced in-house work

Having said that, not all of these will apply in every situation – for example, costs are lower for outsourcing one task,but a recurring or sensitive process may be better handled by someone in-house.

You draw from a larger talent pool

Outsourcing (and remote working in general) allows companies to draw from the largest pool of talent there is – theinternet.

If someone can connect to the internet, they can be hired by a company halfway across the world to do that one taskthey are an expert at.

If you don’t hire remotely or outsource anything, you’re limiting yourself to local talent, which is a great way to shootyourself in the foot. Not only are you reducing the expertise you can draw from, but you’ve locked your business intoworking with only one time zone.

Think about it – if you have a task like customer support it makes sense to have at least two technicians. Doing so(with, say, one in the US and one in the UK) lets you cover support duty 24 hours a day.

Lower costs

Depending on where you outsource to, you could save a lot of money by outsourcing to a company where the pay islower. For example, a VA in the Philippines earns roughly a third of one in the US.

Not only that but you’re drastically reducing your real estate costs because, well, you don’t need an office.

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Remember though that this shouldn’t be a priority – you get what you pay for. Still, if the going wage in India is $1kless for the same position for someone with the same qualifications, then why not save the grand?

It forces business centralization

Outsourcing comes with a fair few risks, such as quality assurance and a disconnect between you and the workeron how to carry out their tasks.

If, however, you’ve documented your processes and have a centralized culture, outsourcing becomes a breeze –anyone can view the necessary processes at any time, so there are far fewer road blocks to productivity. It’s a vitalstep to any kind of business process management.

Documenting your processes lets you easily track employee progress, encourage productivity and accuracy, and

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add accountability to their actions. If someone isn’t getting their work done you can see who it is and what they stillneed to complete at a moment’s glance.

Hell, documented and centralized processes also allow for greater business process automation. This saves yourcompany time and money by eliminating the tasks that don’t require human input, letting you and your team(including any VAs) focus on doing the work that actually matters.

Ready access to more specialized workers

“I didn’t want to hire anybody to build me a website. I built or rather Ibought a predesigned WordPress theme. This was $80 or whatever itwas. Excellent. Stick it in the back. Thank you for playing.”

“I loaded up… and I go and then I start ruining the code. I spanked the hell out ofthis site and it looked like a complete dog’s dinner when I was donewith it. Then I did what I should’ve done in the first place, and I went toElance and I found somebody to fix the mess that I created… It cost me $400.”

“Why the hell didn’t I just do it in the first place?”

Outsourcing is key to completing the tasks you have no idea how to do. If part of becoming a successfulentrepreneur is learning how and when to delegate (it is), outsourcing is just as key to bringing in the talent you needfor specific tasks.

Need an ebook created from your base text? Outsource it to a designer.

Making a podcast and want the sound to be top notch? Outsource it to someone who can edit audio.

This even goes for tasks that you think you know how to do – there’s always going to be someone more experiencedthan you in a specific field so why not take advantage of their expertise by outsourcing?

Again, there’s an argument for hiring someone full-time if the tasks you need to get done are recurring, butoutsourcing is still great for taking care of the less common items which need greater expertise.

Lets you access better technology

This goes hand-in-hand with access to more specialized workers – if you outsource to a designer, you’ll probablyalso gain access to a graphics tablet, Photoshop, and more in the process.

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They can work when you can’t

By outsourcing to an overseas party you can effectively cover several time zones without having to stay up into theungodly hours of the morning.

This makes offshore outsourcing great for tasks like support duty, as you can respond to customers day or night(again, there’s a reason you hear about so many call centers being in India).

Plus, any negatives associated with various time differences can be mitigated or eliminated entirely bycommunicating clearly and regularly. If you expect a project to be done by a specific time, make sure they knowabout it (and be sure to include the time zone you’re talking about).

You still need to be vocal about how long you expect someone’s response time to be, but your centralized processes(as detailed above) also make certain that everyone is on the same page and has all of the information they need.

It frees up your time 9/14

It frees up your time

Outsourcing tasks frees up time for you to spend on more important work, like the bigger picture of how yourcompany should improve and grow.

Combine business process automation with outsourcing and you’re now able to focus on the tasks that actuallymatter and no-one else can do.

You don’t need to do your own bookkeeping, but you DO need to be constantly aware of what you are buildingtowards and the next step in your plan.

Allows scaling through reduced in-house work

No matter how big your business is, there will come a point where your current team physically cannot handle anymore tasks. This leaves you with two options if you want to keep on growing and scaling up.

First, you can hire someone new in-house. This hire will take time and money to train up, and may not prove even tobe a suitable fit for your company culture.

Alternatively, you can ask the four questions from the beginning of this post and outsource what you can. That wayyour team can shrug off some of their unnecessary tasks and make time to take on more vital work to allow yourcompany to scale.

Outsourcing cons

Much like the pros, there are five main cons to outsourcing:

Security risks

Lack of complete control

Lack of quality control

It’s harder to build culture

Language or accent barrier

Again, depending on the task you outsource these disadvantages may have more or less bearing on your finaldecision.

Security risks

Of course, when outsourcing tasks there is going to be a degree of security risk. At the same time, however, the rightprecautions can take the bite out of this danger.

As stated earlier, the best way to do this is to draw up agreements (NDAs) or contracts before outsourcing to protectyour information.

You can also limit the tasks you outsource to less sensitive information (such as designing an ebook over handlingyour customer data) – they can’t share what they don’t have access to.

Either way, it’s best to check the history of the people you consider outsourcing too. Yes, it sounds like a no-brainer,but it’s important to remember to check up on whoever you’re planning on working with (even if it’s for a singleoutsourced task).

You can do this by checking reviews and feedback from previous clients on whatever site you find the10/14

person/company on, or by checking their website’s “Security” page (most companies will have this).

Lack of complete control

This is both the best thing about outsourcing and the scariest concept for many to wrap their head around; the ideathat you will no longer be fully in control.

This is an idea that you need to get rid of if you want your business to be scalable – you’re not superhuman, and youcan’t handle everything by yourself (or even with your in-house team).

As such, even if you enjoy a certain task or believe that only you can do it right, you need to take a long hard look atyour current workload and ditch or outsource what you shouldn’t be doing.

Lack of quality control

One of the biggest fears (which is sometimes warranted) with outsourcing is that you won’t get what you pay for.

Articles can be plagiarized, accounts botched, manufacturing corners cut, you name it, and it can happen.Unfortunately, when this happens your company will take a hit as a result.

There are a couple of ways to avoid the risk of bad results with outsourcing. The first is to look for testimonials fromprevious customers of the company or person you’re looking at.

However, a much easier (and hands-off) way of getting the quality control you need is to use Process Street.

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Not only can you use it to document your processes so that everyone knows what to work on and how to get theirtasks done, but you can check on the progress of any checklist run by your team in real time.

For example, you could run a content promotion checklist, assign the person you’re outsourcing to, and set a duedate to make sure they know what time limit they have.

Then, if you want to check on their progress, you just have to re-open the checklist to see which tasks they havemarked as complete.

Not only that, but you can see an overview of all of the checklists which have been run, including which are still inprogress, who is assigned to them, and what steps are yet to be completed.

It’s harder to build culture

This outsourcing disadvantage goes two ways – it’s harder to create an all-inclusive culture, seeing as at least partof your “team” is not under your sole employment. This means that you may not be as tight-knit and/or supportive ofone another as if you were all in-house.

Having said that, company culture doesn’t matter so much when concerning the company you’re outsourcing to.After all, they’re not part of your company, and so the relationship between you is always going to be moreprofessional.

Language or accent barrier

This is a problem mainly with jobs which require written or (more importantly) spoken language skills – you may wellfind in these cases that outsourcing abroad is not the best idea.

For example, if you’re outsourcing a support helpline for an English or American company, you need to think abouthow important it is to have a native English speaker answering your phones.

If it’s not an issue in your mind, you could go further afield and outsource the helpline to India – it’s not likely that theemployees will have as clear an accent as a US resident, but the cost and convenience may outweigh that.

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The alternative, however, is to hire the required staff in-house (which isn’t always possible given a set budget).

Should you use productized outsourcing?

So, by now you should have a good idea of whether you want to outsource your tasks or not, and beyond that evenwhether you should be looking for local talent or offshore.

There is one kind of outsourcing which we need to show in a little more depth; productized outsourcing.

This is where you outsource a task to a company who provide both a piece of software and an employee to help youor use that software.

For example, Bench offers accounting software but also an accountant to use it for you. Essentially, you’re getting atask completed without needing the employee or even the software to be in-house.

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By signing up to a digital service, you gain access to an employee who takes care of whatever you’re outsourcing,usually using their own company’s program or resources to do so.

In other words, it’s outsourcing, but with a SaaS model.

Let’s get to outsourcing!

Whilst it’s not quite the magic pill that many have taken it to be since the release of the 4-Hour Workweek, byweighing the outsourcing pros and cons you can hand off all of the work you don’t ned to do and regain focus onwhat really matters.

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